UPDATE 1-Brazil's Eletrobras to defer sale of 6 power distributors to 2017

RIO DE JANEIRO Jan 26 (Reuters) - Eletrobras,
Brazil's state-run electricity company, will delay the sale of
six power distribution companies it controls in the northern
part of the country until 2017, a company source familiar with
the decision told Reuters on Tuesday.

The company had planned to sell all the distributors this
year, as it looks to get rid of money-losing subsidiaries and
focus on areas such as electricity generation.

Centrais Eletricas Brasileiras SA, as Eletrobras is formally
known, decided to wait for a planned 5.9 billion reais ($1.44
billion) capital injection from the Brazilian government this
year before going ahead with the sales, the source said.

Eletrobras expects to use 3.3 billion reais to pay debt
linked to the distributors and 2.6 billion to improve services
before the businesses can be offered to potential buyers next
year.

"The distributors need to pay debt they have with Eletrobras
and they have some mandatory investments to make in 2016 before
their privatization can be addressed," said the source.

The capital injection was included in the federal government
budget for this year and confirmed by the Energy Ministry. The
source said Eletrobras expects the injection in the first half
of the year.

"The (distributors) sale process will last at least a year
and these companies cannot stop investing during this period. So
it is a lengthy process that will have a conclusion only next
year," said the source.
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